Would Federal Tax Deductions and Credits Generate more Kidney Donations?

August 16, 2017

Advocates for federal tax deductions and credits suggest the lack of financial compensation for donors may be responsible for tens of thousands of needless deaths. Evidence indicates that living donors in the United States experience significant financial costs.  At the National Foundation for Transplants, we see our patients and their potential living donors struggle with this reality.  Read about our Living Donor Program on this site.

“The organ shortage has existed since the national organ procurement and distribution system established by the National Organ Transplant Act of 1984 (NOTA) became operational. The problem is simply that there are not enough donors,” wrote Sally Satel and Alan D. Viard in a commentary at economics21.org.

The National Organ Transplant Act of 1984 (NOTA) was adopted with honorable intentions. Their goal was to prevent wealthy patients from buying organs and poor donors from becoming organ suppliers for the well-to-do.

Since then, many believe that an altruism-only system is greatly inadequate. Poor individuals needing a kidney, especially poor minorities, struggle the most. “They are less likely to be listed for transplant and are less likely to receive an organ from a living donor or from the national pool even when they are referred,” according to Satel and Viard. The number of living and deceased donors has not risen significantly.

Transplant patients may deduct medical expenses accrued during the living donation process from their federal income tax. They are not allowed to deduct an organ donation under “charitable donation.” The authorized federal deduction falls under medical expenses.

While steps taken to reduce expenditures are steps in the right direction, living donors still experience significant financial costs incurred from time lost on their job because their employer doesn’t offer vacation and sick time benefits and due to travel and lodging cost.

In Satel and Viard’s commentary, they wrote, “Studies report that up to 96 percent of living donors experienced financial consequences, including 47 percent who lose wages. Living donors may incur an average of $3,268 in expenses, with some reporting up to $8,000 of costs. Living donors who traveled greater distances, had lower household income, and had more unpaid work hours generally had larger costs. Donors’ expenses vary widely because resources to offset costs are variable by state, physical demands of the donor’s job (and associated expected recovery time), employer-provided benefits, and the recipient’s ability to provide financial assistance to the donor.”

Advocates believe with federal tax deductions and credits, inclusion of safeguards will prevent health insurers from denying coverage to organ donors or excluding transplant-related costs from coverage. By encouraging organ donations and reducing expenditures on dialysis, it is estimated the credit could potentially save the government as much as $10 billion per year.

After NOTA became operational in 1984, doctors say there remains confusion in the private sector about whether it’s even legal to reimburse someone for expenses. Some claim not all transplant centers and hospitals got the memo. Potential donors fear they cannot save the life of a loved one simply because they didn’t have enough resources to cover related expenses.

“Misinformation coupled with the lack of substantial financial support for many donors has its consequences,” stated Sigrid Fry-Revere who is a bioethicist and would’ve been an organ donor according to a Markeplace.com interview.

Fry-Revere went on to say, “My friend died.” Fry-Revere would have missed two months of farm work to recuperate after saving her friend’s life, which she could not afford to do. Fry-Revere believes she was personally excluded as a living donor because she didn’t have enough resources. “Her friend would’ve paid to help her with expenses, but she was told she couldn’t receive any money in any way from the donor,” reported Markeplace.com contributor, Sabri Ben Achour.

Troy Zimmerman, Vice President for government relations at the The National Kidney Foundation, stated in an interview with Marketplace.com, “The possibility of delayed savings complicates the prospect of congressional action. Certainly anything that’s introduced in congress if it has a price tag, particularly if it’s a tax credit, tax break, any kind of tax expenditure or entitlement like Medicare or Medicaid, requires a cost estimate from CBO. If it has a net cost over a five or ten year period, it requires an offset.”

In Sabri Ben Achour article, “The Cost of Generosity” for Marketplace.com, he wrote, “The Kidney Foundation favors a tax credit system which would offer individuals cash at tax time. At the federal level it's like any federal tax proposal it has to be combined with a larger tax bill. Tax reform has been one of the most elusive goals on Capitol Hill for many years.”

Medicare already spends tens of thousands of dollars per patient to expedite transplants in some instances. It pays $50,000 - $70,000, for example, to organizations that procure kidneys from dead donors, according to data provided by UNOS. “They get zero if they arrange a living organ donor,” says Fry-Revere. “The incentive has always been to establish better and more deceased organ donation.”

The National Foundation for Transplants implemented a Living Donor Program to defray some of the expenses incurred by living donors. We understand there are potential financial barriers that may prevent even the most willing living donors from giving the gift of life. You can support our Living Donor Program. Make a donation and write “Living Donor Program” in the description box.

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Loretta Whitmore, NFT Blogger